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OD

OLD DOMINION FREIGHT LINE, INC. (ODFL)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 revenue was $1.408B, down 6.1% year over year; diluted EPS was $1.27, down 14.2% as operating ratio deteriorated to 74.6% (+270 bps) amid lower volumes and higher depreciation and benefits costs .
  • Revenue and EPS were slightly below Wall Street consensus: $1.408B vs $1.416B* and $1.27 vs $1.286*; EBITDA was $448.6M vs $451.9M*, reflecting deleveraging on reduced tonnage and elevated overhead. Bold miss on both revenue and EPS *.
  • Management highlighted yield discipline (LTL revenue per hundredweight ex-fuel +5.3% YoY) and best-in-class service (99% on-time, ~0.1% cargo claims) despite volume declines (tons/day -9.3%), aiming to preserve pricing and prepare for a demand inflection .
  • Near-term outlook: CFO expects Q3 operating ratio to worsen by ~80–120 bps if revenue/day remains flattish; July MTD revenue/day is down ~5.1% YoY, with tax rate guided to 24.8% for Q3 .
  • A catalyst on the day: one analyst noted the stock was down ~8% amid concerns about prolonged tonnage softness and estimate deceleration, despite ongoing yield gains .

What Went Well and What Went Wrong

What Went Well

  • Yield discipline: LTL revenue per hundredweight ex-fuel rose 5.3% YoY; overall rev/cwt +3.4% supporting pricing against cost inflation .
  • Service quality: “on-time service performance of 99% and a cargo claims ratio of 0.1%,” underscoring execution even in a soft environment .
  • Cash generation and shareholder returns: Q2 operating cash flow $285.9M; YTD $622.4M; capital returned H1 included $424.6M buybacks and $118.5M dividends .

Management quote: “Our market share remained relatively consistent and our team continued to execute on our long-term strategic plan…provide superior service at a fair price” — Marty Freeman, CEO .

What Went Wrong

  • Volume pressure: LTL tons/day -9.3%, shipments/day -7.3%, weight/shipment -2.1% YoY; April-to-June monthly tonnage changes were below historical norms .
  • Margin deleverage: Operating ratio to 74.6% (+270 bps); overhead costs +160 bps of revenue (depreciation +80 bps; miscellaneous +40 bps), benefits costs rose to 39.5% of salaries .
  • Sequential outlook cautious: Q3 OR expected to worsen ~80–120 bps if revenue/day stays flattish; July MTD revenue/day down 5.1% YoY (tons/day -8.5%), flagging limited near-term momentum .

Financial Results

Core P&L and Margins

Metric (USD)Q2 2024Q1 2025Q2 2025
Revenue ($MM)$1,498.7 $1,374.9 $1,407.7
Operating Income ($MM)$421.7 $338.1 $357.9
Operating Ratio (%)71.9% 75.4% 74.6%
Net Income ($MM)$322.0 $254.7 $268.6
Diluted EPS ($)$1.48 $1.19 $1.27

Actual vs Consensus – Q2 2025

MetricConsensus*Actual
Revenue ($MM)$1,416.1*$1,407.7
EPS ($)$1.286*$1.27
EBITDA ($MM)$451.9*$448.6*

Values marked with * retrieved from S&P Global.

Segment/Revenue Mix

Metric ($MM)Q2 2024Q1 2025Q2 2025
LTL Services Revenue$1,485.0 $1,360.8 $1,395.1
Other Services Revenue$13.7 $14.0 $12.6
Total Revenue$1,498.7 $1,374.9 $1,407.7

Operating KPIs

KPIQ2 2024Q1 2025Q2 2025
LTL Tons (000s)2,340 2,087 2,123
LTL Tons per Day36,560 33,135 33,178
LTL Shipments (000s)3,100 2,808 2,874
LTL Shipments per Day48,444 44,566 44,907
Rev per Hundredweight ($)$31.77 $32.67 $32.84
Rev/Cwt ex-Fuel ($)$26.75 $27.89 $28.17
Rev per Shipment ($)$479.48 $485.79 $485.31
Weight per Shipment (lbs)1,509 1,487 1,478
Avg Length of Haul (miles)918 916 912
Avg Active Full-Time Employees22,702 21,817 21,621

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Total CapexFY 2025~$450M (revised in Q1: $210M RE/$190M equipment/$50M IT) ~$450M (same breakdown) Maintained
Effective Tax RateQ3 2025n/a~24.8% New
Operating Ratio Seq.Q3 2025n/aOR up ~80–120 bps vs Q2 if revenue/day flattish New (cautious)
Yield ex-FuelQ3 2025n/a+4.0–4.5% YoY (July pacing ~mid-range) New
Overhead CostsQ3 2025~$305M run-rate noted earlier ~$310M in Q2; likely “tick up” further in Q3 if revenue flattish Raised
Quarterly DividendSep 2025 payment$0.26 (Sep 2024) baseline$0.28 per share payable Sep 17, 2025; record Sep 3, 2025 Raised (+7.7%)

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4’24, Q1’25)Current Period (Q2’25)Trend
Macro/TonnageQ4: OR +410 bps; industry volumes down; PMI >50 gave cautious optimism . Q1: Feb/Mar at seasonality; tariffs uncertainty .Volumes weak (tons/day -9.3% YoY); July MTD revenue/day -5.1% YoY .Deteriorating near term
Yield DisciplineQ4: ex-fuel up 3.8% Jan; focus on cost-based pricing . Q1: ex-fuel +4.1% YoY .ex-fuel +5.3% YoY; Q3 guide +4–4.5% .Improving
Overhead/DepreciationQ4: misc and insurance pressured OR; overhead ~$300M/quarter . Q1: depreciation +70 bps; capex trimmed to $450M .Overhead +160 bps; depreciation +80 bps YoY; overhead likely higher in Q3 .Slightly worse short term
Technology/Optimization (incl. AI)Ongoing investment cited .Continued focus on linehaul optimization, P&D, dock tech; key to maintaining variable cost efficiency despite lower density .Stable/Positive
Industry Capacity/ShareQ4/Q1: capacity constrained long term; maintained share; TL substitution noted .Share “relatively consistent”; expect TL->LTL reversion when TL rates normalize .Neutral to Positive
Fuel & Operating SuppliesQ1: tariff impact on parts expected .Fuel $3.56/gal in Q2; elevated at Q3 start; expect some pressure in op supplies .Slight pressure

Management Commentary

  • Strategic focus: “Delivering superior service at a fair price…has strengthened our customer relationships…allowed us to keep our market share relatively consistent” — Marty Freeman, CEO .
  • Execution vs costs: “Operating ratio increased by 270 bps…decrease in revenue had a deleveraging effect…depreciation expenses…direct operating costs increased due primarily to…group health and dental plans” — Company release .
  • Positioning: “Our business model contains meaningful operating leverage…confident in our ability to improve our operating ratio over the long term” — Marty Freeman .
  • Near-term guardrails: “Expect our effective tax rate will be 24.8% for the third quarter” and OR up ~80–120 bps if revenue/day flattish — Adam Satterfield, CFO .

Q&A Highlights

  • Operating ratio trajectory: Guidance for Q3 OR up ~80–120 bps sequential if revenue/day remains flattish, with wage step-up in September and fringe benefits pressure; overhead expected to “tick up” further .
  • Market share and competition: Maintained share through downturn; expect outsized share gains when demand inflects; address perception around private carriers and Transport Topics data .
  • Yield outlook: Revenue per hundredweight ex-fuel expected +4–4.5% YoY in Q3; renewals continue to secure increases .
  • July intra-quarter update: July MTD revenue/day down ~5.1% YoY; tons/day down ~8.5% .
  • Cost buckets: Elevated fuel vs Q2 ($3.56/gal); continued pressure from fringe benefits; losses on asset sales likely to persist in Q3 .

Estimates Context

  • Q2 2025 actuals vs consensus: Revenue $1.408B vs $1.416B* and EPS $1.27 vs $1.286*; EBITDA $448.6M vs $451.9M*, reflecting slight misses on the top line and earnings amid cost deleverage *.
  • Forward expectations: Q3 2025 consensus EPS $1.217* and revenue $1.403B* imply modest sequential step-down; management’s OR guidance suggests limited operating leverage until volumes improve*.

Values marked with * retrieved from S&P Global.

Key Takeaways for Investors

  • Pricing intact, volumes soft: Yield ex-fuel +5.3% YoY, but tons/day -9.3% and shipments/day -7.3% highlight a demand-driven margin headwind .
  • Near-term margin risk: Q3 OR guide up ~80–120 bps if revenue/day remains flattish; watch for September wage increase and overhead trajectory .
  • Service moat persists: 99% on-time and ~0.1% claims enable disciplined pricing and potential share gains when the cycle turns .
  • Cash discipline with readiness: FY25 capex held at ~$450M to balance near-term overhead with long-run capacity and tech positioning .
  • Estimate calibration: Slight Q2 misses on revenue/EPS/EBITDA vs consensus; Street may need to temper near-term OR expectations until volumes inflect*.
  • Trading lens: Intra-quarter July softness and sequential OR guide are likely overhangs; upside catalysts hinge on industrial activity, tariff clarity, and TL-to-LTL reversion .
  • Medium-term thesis: High-quality network, technology-enabled efficiency, and service leadership position ODFL to recapture operating leverage and drive sub-70% OR in an upcycle over time .